Gross profit was $21.4 million (54% of total revenue) compared to $32.7 million (61% of total revenue);

Adjusted EBITDA loss of $2.4 million versus Adjusted EBITDA of $10.5 million (20% of total revenue);

Recurring revenue was 63% of revenue, compared to 46%;

Planned restructuring costs totalled $26-28 million will result in annual expense savings of up to $25 million by Fiscal 2017;

Net loss was $35.6 million, or $0.33 loss per share (including the $24.5 million, or $0.23 per share, in restructuring costs) versus a net loss of $2.0 million or $0.02 loss per share;

Adjusted cash from operations was $2.7 million;

Available liquidity as at March 31, 2016 was $64.3 million, including $44.3 million of cash, and,

Order backlog was $175.5 million.

Fiscal Q2 2016 Operational Highlights

Won a contract valued at $15 million with a Tier 1 communications services provider (CSP) in the Asia Pacific region to deliver the latest version of Redknee Unified and to replace a competitor’s legacy postpaid billing system;

Won a multi-year renewal of its software and services contract with TIM Brazil under which Redknee will provide an end-to-end solution that includes new software capabilities, managed services, and support services;

Launched the latest release of Redknee Unified, Redknee Unified 2016, at Mobile World Congress, the world’s largest gathering for the mobile industry;

Released a report with Ovum to investigate the Digital Transformation and the evolution of Communications Service Providers into Digital Service Providers;

Signed a multi-year license, support and consulting services contract with Turk Telekom;

Established a new partnership with Wipro to offer comprehensive transformation services; and,

Continued to expand the patent portfolio with a total of 153 patents granted and 27 patents filed at quarter end, with additional patents still undergoing transfer following the acquisition of Orga Systems.

Operational Highlights Subsequent to Fiscal Q2 2016

Secured a three-year contract for software licenses and services valued at more than $20 million with a leading Tier 1 communication service provider in APAC to expand the Redknee Unified solution to deliver flexible rating and charging services and support the customer’s transformation to a digital services model;

Won an $8 million contract with a leading Tier 1 CSP in the Americas to deploy the Redknee Unified solution to deliver its multi-brand growth strategy across multiple countries. Redknee’s converged monetization and subscriber management solution allows the CSP to leverage a virtualized and cloud-based solution to support new brands in retail telecom and M2M markets across the Americas;

Named as one of the top Canadian ICT companies in the Branham Group’s annual listing; and,

Successfully reached an agreement with the Workers’ Council at the Company’s site in Berlin, Germany, allowing the Company with respect to its planned restructuring. As part of the agreement, Redknee will open a Global Centre of Technical Excellence and a Global Operations Leadership Centre, both of which will be based in Berlin.

Management Commentary

“We are seeing our business returning to a strong orders momentum,” said Lucas Skoczkowski, President and CEO, Redknee Solutions Inc. “As per our expectation subsequent to the quarter end, we have closed over $35 million of orders, including our most recent three-year $20-plus million software and services expansion contract, further strengthening our order backlog, while supporting growth in revenues in the coming quarters.”

“Although our first half fiscal 2016 results have been impacted by the purchasing decision delays of communication service providers, Redknee continues to provide one of the most agile and competitive solutions on the market which is essential to our customers’ ability to execute their transition from traditional to real time digital business models. We have proven our ability to replace large competitors in the market and successfully delivered Redknee’s managed services offering for a mission critical system with over 100 million subscribers. Our sales pipeline continues to be robust, customer and partner discussions are active, and we are confident that we will add more significant contract wins over the coming quarters.”

“In our operations, we continue to make progress on our near-term priorities of expanding gross margin, growing recurring revenue and driving cash flow generation alongside our ongoing focus on optimizing our cost structure to maximize long-term profitability. We have reached agreement on restructuring in the key locations and we now expect annual costs savings of up to $25 million on total restructuring costs of up to $28 million.”

Fiscal Q2 2016 Financial Results

Revenue was $39.8 million ($40.6 million on a constant currency basis) compared to $53.7 million in the same year-ago quarter. The change in revenue compared to the prior year period resulted mainly from the impact of lower license revenue due to delays in customer purchasing decisions and foreign exchange variation, compared to the same year-ago quarter.

Order backlog increased 12% to $175.5 million ($174.5 million on a constant currency basis) from $157.2 million in the same year-ago quarter, and sequentially order backlog increased 5% from $166.8 million reported last quarter.

Recurring revenue was 63% of total revenue, compared to 46% in the same year-ago quarter.

Gross margin was 21.4 million or 54% compared to $32.7 million or 61% in the same year-ago quarter.

Adjusted EBITDA loss was $2.4 million, compared to Adjusted EBITDA of $10.5 million, or 20% of revenue, in the same year-ago quarter (see discussion about the presentation of Adjusted EBITDA, a non-IFRS measure, below).

Net loss totalled $35.6 million, or $0.33 loss per basic and diluted share compared to a net loss of $2.0 million, or $0.02 loss per basic and diluted share, in the same year-ago quarter. Net loss included $24.5 million of restructuring costs, with the final restructuring costs expected to be $26 to 28 million. The Company expects the restructuring will reduce annual overall expenses by up to $25 million by Fiscal 2017, with partial savings occurring through the last quarter of fiscal 2016.

At March 31, 2016, total cash ended at $44.3 million. Adjusted cash flow from operations was positive at $2.7 million (see discussion about the presentation of Adjusted cash flow from operations, a non-IFRS measure, below).

During Q2 2016, the Company purchased 747,990 shares under its Normal Course Issuer Bid (NCIB) for a total cost of approximately CAD$2.0 million. Since the NCIB’s commencement on December 7, 2015, the Company has purchased an aggregate of 1,265,690 shares for a total cost of approximately CAD$3.5 million.

Please refer to the section regarding forward-looking statements which form an integral part of this release. These results, along with the annual audited consolidated financial statements and the Company’s MD&A, are available on the Company’s website at www.redknee.com and on SEDAR at www.sedar.com.

Conference Call

The company will host a conference call tomorrow (May 10, 2016) to discuss these results. CEO Lucas Skoczkowski and CFO David Charron will host the presentation starting at 8:30 a.m. Eastern time. A question and answer session will follow management’s presentation.

Redknee monetizes today’s digital world. We provide a complete portfolio of mission-critical monetization and subscriber management solutions and services that allow communications service providers, utility companies, auto makers and enterprise businesses of all types to charge for things in new and innovative ways. Redknee’s real-time billing, charging, policy and customer care offerings provide the agility and scalability to drive a unique user experience, increase profitability and support any new product or business model. Available on premise, cloud-based, or as a Software-as-a-Service, Redknee’s low-risk, flexible solutions power more than 250 businesses across the globe. Established in 1999, Redknee Solutions Inc. (TSX: RKN) is the parent of the wholly-owned operating subsidiary Redknee Inc. and its various subsidiaries. References to Redknee refer to the combined operations of those entities. For more information about Redknee and its solutions, please go to www.redknee.com.

Non-IFRS Measures

The Company reports “Adjusted EBITDA”, which is not a financial measure calculated and presented in accordance with International Financial Reporting Standards (IFRS), and should not be considered in isolation or as a substitute to net income (loss), operating income or any other financial measures of performance calculated and presented in accordance with IFRS, or as an alternative to cash flow from operating activities as a measure of liquidity. The Company defines Adjusted EBITDA as net income (loss) excluding amounts for depreciation and amortization, other income, finance costs, finance income, income tax expense (recovery), foreign exchange gain (loss), share-based compensation, restructuring costs and acquisition and related costs. “Recurring revenue,” is not a financial measure calculated and presented in accordance with IFRS and should not be considered in isolation or as a substitute to revenue. Recurring revenue includes revenue from support and maintenance agreements, long term service agreements, and term-based product licenses and software subscription.

“Adjusted cash flow from operations”, which is non-IFRS measure, is defined as cash flow from operations excluding amounts for restructuring payments made in the period.

“Order backlog” relates to contractual commitments as at period end, pending to be delivered and will be recognized as revenue in future periods. Order backlog is not a financial measure calculated and presented in accordance with IFRS and should not be considered in isolation or as a substitute to revenue.

The “constant currency” presentation, which is a non-IFRS measure, excludes the impact of fluctuations in foreign currency exchange rates. The Company calculates constant currency by converting the current period local currency financial results using the comparative period exchange rates.

Other companies (including competitors) may define Adjusted EBITDA, Adjusted cash flow from operations, recurring revenue, and order backlog differently. The company presents Adjusted EBITDA, Adjusted cash flow from operations, recurring revenue, and order backlog because management believes these to be important supplemental measures of performance that are commonly used by securities analysts, investors and other interested parties in the evaluation of companies in Redknee’s industry. Management uses this information internally for forecasting and budgeting. It may not be indicative of the historical operating results of Redknee nor is it intended to be predictive of potential future results. See “Reconciliation of Net Income (Loss) to Adjusted EBITDA”below for further information on this non-IFRS measure.

Forward-Looking Statements

Certain statements in this document may constitute “forward-looking” statements which involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. When used in this document, such statements use such words as “may,” “will,” “expect,” “continue,” “believe,” “plan,” “intend,” “would,” “could,” “should,” “anticipate” and other similar terminology. Forward-looking statements are provided for the purpose of providing information about management’s current expectations and plans relating to the future. Persons reading this news release are cautioned that such information may not be appropriate for other purposes.

Such forward-looking statements include statements respecting anticipated reduction in annual expenses in fiscal 2016 and 2017 and no direct impact on customer service or the Company’s product development, expansion of Adjusted EBITDA, future opportunities in the company’s core communication and non-telecom monetization businesses, improvement in margin with an increase in revenue from higher-margin software license deals as well as statements regarding Redknee’s future plans, objectives or performance for the current period and subsequent periods and regarding the markets for our products. These statements reflect current assumptions and expectations regarding future events and operating performance and speak only as of the date of this document. Forward-looking statements involve significant risks and uncertainties, should not be read as guarantees of future performance or results, and will not necessarily be accurate indications of whether or not such results will be achieved. A number of factors could cause actual results to vary significantly from the results discussed in the forward-looking statements, including, but not limited to, the failure of demand for Redknee’s products to develop as anticipated, the failure to obtain customer orders or meet customer requirements, the inability of Redknee’s products to perform as expected, the inability of Redknee to achieve anticipated cost savings in the time frames and to the extent anticipated, unanticipated negative impacts on customer service or product development as a result of costs savings implemented, a material adverse change in the affairs of Redknee, and the factors discussed under the “Risk Factors” section of Redknee’s most recently filed AIF which is available on SEDAR at www.sedar.com and on Redknee’s web-site at www.redknee.com. Other unknown or unpredictable factors or underlying assumptions subsequently proving to be incorrect could cause actual results to differ materially from those in the forward-looking statements. Redknee does not undertake or accept any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements to reflect any change in its expectations or any change in events, conditions or circumstances on which any such statement is based, except as required by law.